Subject: Income Tax Allocation in a Holding Company Structure Date: December 10, 1998

To: Chief Executive Officers of National Banks, Department and Division Heads, and all Examining Personnel

Description: Interagency Policy Statement

The guidance attached to this bulletin continues to apply to federal savings associations.

On November 23, 1998, the Office of the Comptroller of the Currency, the Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Office of Thrift Supervision published the attached joint policy statement on intercompany tax allocation agreements. The policy statement provides guidance regarding the allocation and payment of income taxes by banks that file an income tax return as members of a consolidated group. In general, intercorporate tax settlements between a bank and its parent should result in no less favorable treatment to the bank than if it had filed its income tax return as a separate taxpayer.

In addition, the policy statement recommends that each depository institution have a written, comprehensive tax allocation agreement addressing intercorporate tax policies and procedures.

For more information, contact the Office of the Chief Accountant (202) 649-6280.